AusNet’s $200k Compensation Offer – Fact or Fiction?

AusNet's $200k Compensation Offer

Recent reports have created heated debate around the amount of compensation and need to be discussing this now. Is this all fact or fiction?

AusNet Services has recently released guidelines for the Western Victoria Transmission Network Project (WVTNP) to provide landholders with more information on important issues like land access, compensation and easements.

AusNet’s media release states that Landholders who have a transmission line easement acquired on their property for the WVTNP will receive compensation, which is calculated by a qualified valuer in accordance with valuation principles set out in the Land Acquisition and Compensation Act 1986 (Vic) and the Valuation of Land Act 1960 (Vic).

The million-dollar question - how much compensation will landholders receive?

According to a recent article in the Weekly Times, AusNet sets out powerline compo rules: More than $200K per tower. The article states, AusNet Services will pay landholders more than $200,000 to compensate for each high voltage tower it builds on their properties, as it prepares to roll out the Western Victoria Transmission Network Project.

The article also states, landholders will also be compensated for easements taken out on their properties under each powerline span, which will range in width from 40m to 100m.

ABC Ballarat has also reported that landowners would receive financial compensation on a pro-rata basis, centred on the market value of the land with an average cost of $200,000 per tower line (assume they meant power line), the figure derived from a total value of $50 million dollars over the properties.

At first glance, this seems like a reasonably attractive proposition, apart from the $50 million cap. If you host 5 towers on your land, that’s a million bucks plus whatever compensation you will receive for the easement.

This is certain to have landholders lining up ready to sign. Or will it?

Backlash from landowners

A resounding backlash from landowners continues, across the single proposed corridor.

Communities are united in opposition to the offer with a spokesperson stating, “we will not accept financial compensation for above-ground towers, no amount of money will allow towers on our land.” And they are not alone.

In NSW, Landline has reported that farmers don't want powerlines on their land as hosting transmission lines comes with little benefit or choice.

Farmer Peter Campbell is among a large group of landholders fighting the proposal. "You can't pay us enough. Transgrid and the government could not pay us enough money to host this power line and we will defend our land," Mr Campbell said.

$200K per tower – Fact of Fiction

It appears there is some confusion about exactly what is on offer.

  • The Weekly Times reported $200K per tower plus compensation for the easement
  • ABC Ballarat reported an average of $200K per tower line (I assume they meant power line) with a total value of $50 million
  • Some community members have also reported that the $200K reflects the price per easement.

So, what is the amount?

First, let’s clarify a few things. There is no fee per tower, there is no set price per easement. The compensation value for the easement will equal the decrease in land value due to the easement.

AusNet Services will seek to enter into an agreement with each landholder along the route to acquire an easement over their land on agreed terms and for an agreed price within a certain period of time. Executive Project Director, Stephanie McGregor, said it was important that compensation was assessed on a case-by-case basis.

Calculating compensation will not be done with a blanket approach. Every landholder along the final route will be treated individually, and a range of factors and potential impacts will be taken into consideration”.

Landholders will also have the option to discuss flexible payment options for agreed easement compensation, such as spreading it over a longer period,” she said.

How is the amount of compensation determined?

Assessing compensation includes a range of components including the difference between the market value of the land before the easement and after the easement, financial loss caused by disruption to the landholder or their business, and legal or professional costs.

As a part of the compensation package, AusNet will work with landholders who need to modify some farming practices to safely work under the proposed easement, by replacing equipment and machinery.

The assessment of compensation will be determined in accordance with valuation principles set out in the Land Acquisition and Compensation Act 1986 (Vic) and the Valuation of Land Act 1960 (Vic), made up of the following components:

How is the amount of compensation determined?

1. Impact on market value of property

Where an easement is being acquired, the compensation for market value is the difference between the market value of the land before the easement and after the easement. Market value may include the reasonable ‘highest and best use’ of the land, based on what is physically, legally and financially possible. For example, the ‘highest and best use’ of the land might be subdivision of the land into individual lots or its value might be greatest if multiple parcels are packaged.

For example, you own a parcel of land used for grazing cattle. The preferred route of the WVTNP passes through your property and an easement width of 80 metres is required. A valuation assesses the land value (before the easement) then valuation assesses the land value (after the easement). The difference in values is the 'impact' and that is what you will be paid, not the actual value of the easement land.

So, your compensation might be a lot less than you think.

Say your land value is $2 million before the easement and $1.9 million after acquisition, this means you will be entitled to $100K in compensation plus any additional values determined in items 2-5.

2. Impact on market value due to severance

This is reduction in market value of land which is caused by land severed from other land because of the easement.

For example, an easement on agricultural land may be located so that it effectively ‘quarantines’ a part of the land, limiting its use for farming activities. Compensation is payable for the depreciation in the value of the land associated with the severing of that land and will usually be wrapped up in the market value calculation.

3. Special financial value of property

This refers to any additional financial value only available to you in respect of the affected land and not to the market in general. This considers ‘special’ economic value rather than sentimental value.

For example, a house fitted out with consulting rooms may have special value to the doctor-owner but would not have value to the market in general. This will usually be wrapped up in the market value calculation.

4. Financial loss caused by disruption

This refers to any financial loss caused by disruption to you, including your business, arising directly and reasonably from creating the easement.

For example, if timing of the acquisition means that you cannot harvest a sown crop, you will be compensated for the value of crop lost.

5. Costs incurred for legal and valuation

This refers to any reasonable professional costs incurred by you because of the acquisition of the easement. Where you, as a landholder, obtain independent legal advice to assist in the process to negotiate an option for easement, and/or independent valuation advice from a qualified valuer to assist in the valuation, compensation and easement negotiation process, AusNet Services will reimburse the reasonable cost of this independent advice.

6. Total Compensation Payout

Using the above process (1+2+3+4+5=6), an easement payment offer will be determined and presented to you. If you do not agree with the proposed offer, be sure to seek your own legal advice and valuation from appropriately qualified, licensed, and experienced parties.

Its worth noting that unlike the claims made in the media around $200K, you will be entitled to whatever this total ends up being.

There is no cap per landholder and there is certainly no $50 million cap.

Will neighbours to the easement be able to receive formal compensation?

Most large-scale energy projects will have neighbours. Neighbours are residents or owners of the neighbouring properties next to the host landowner’s properties, either in adjoining properties or properties within proximity to the project. There may also be neighbours that are not in direct proximity to the project that could be affected by other related project infrastructure, such as roads used for transport to and from the project.

Neighbours may also include functional facilities, such as an airfield, where a proposed transmission line could have significant impact on the ongoing operation and safety integrity of the facility.

Neighbours can be materially impacted by the development, construction, and operation phases of the project. Impacts can include dust, disruptions, road damage, blocked roads, visual amenity, noise, and economic loss.

According to the Australian Energy Infrastructure Commissioner (AEIC), while developers have generally engaged and consulted well with potential host landowners, developers have not always understood the importance of consulting and working with neighbours in proximity to a project.

AusNet Services have stated that formal compensation is limited to the acquisition of an easement on landholders’ properties within the proposed route. If you are visually impacted, as many will be, you will not be compensated at all. There is currently no policy or framework to benefit impacted neighbours. Through discussions with network planners, community benefits are likely to be in the form of financial assistance to local not-for-profit organisations. So those who are expected to carry the burden of overhead transmission lines, are not likely to benefit at all, regardless of the potential economic impacts.

There is something disturbingly wrong with this and indicates a desperate need for reform.

According to the AIEC, lack of effective agreements with neighbours can lead to a range of material issues for a project, including conspicuous opposition to the project (and any modifications to the proposed project), formal objections that may lead to planning/approval delays and appeals, legal actions against the project or planning authority, the project (or elements of the project) not being approved as well as widespread negative media coverage about the project and the industry more broadly.

Some developers have introduced the concept of ‘neighbour agreements’. These agreements can provide a commercial arrangement between the project and neighbour that recognises the possible impacts of the project on the neighbour and to gain the neighbour’s support.

Agreements may also be mandatory to gain a permit approval in the event the neighbour is at a risk of experiencing impacts from the project that exceed permit/standards limits or if they reside within a default setback distance zone.

The content of a neighbour agreement is typically confidential to the parties, but may include one or more of the following:

  • annual payments to the neighbour for the life of the project (including payments during the development, construction and operating phases of the project)
  • a one-time payment at the commencement of the agreement
  • reimbursement of reasonable legal fees incurred by the neighbour for the review of the agreement
  • reimbursement for, or provision of, items such as visual screening, insulation, double-glazing, air-conditioning, energy efficiency programs, solar panels, electricity consumption, increased insurance premiums
  • reimbursement for any increased insurance premiums levied to the neighbour as a result of any increases to the sums insured for public liability due to the presence of the wind or solar farm
  • an option for the neighbour to request that the developer acquire the neighbour’s property, and
  • ability for a neighbour to terminate an agreement without penalty.

Like host landowner compensation, neighbours to transmission line projects should benefit from an agreement with payments based on a formula of distance from the neighbour (residence or functional facility) to the transmission infrastructure and the number of towers located within that distance. 

Energy Grid Alliance are discussing this matter with the Australian Energy Infrastructure Commissioner. You should too.

Should you be discussing and option for easement and financial compensation now?

Historically, discussions around compensation do not commence with landowners until a preferred final route has been confirmed. AusNet Services has brought these discussions forward. Why? Nobody is quite sure. Maybe it is to help determine the final route, maybe it is to appease shareholders of potential bidders that the project remains on track?

Whatever the reason, there is no obligation to enter discussions or an easement option agreement until the preferred final route is determined and even then, it is completely your choice.

Once a proposed route for the transmission line is determined in late-2021, AusNet Services’ Land Liaison Officers will contact landholders to discuss the proposed route, how it may impact their property and discuss opportunities to minimise impacts through design and micro-siting. Following consideration of feedback from landholders, further discussion will be held with landholders on the timing and works that may be undertaken on properties during construction and operation.

During these discussions, landholders may also wish to outline the operational and specific requirements related to their property which might be affected by the presence of a transmission line easement so that steps can be taken to avoid, minimise or make good these impacts, wherever possible. The Land Liaison Officers will discuss options to minimise the impact on individual landholders and their property as far as possible, and information about the easement terms and compensation for easement based on the valuation.

What is an option for easement?

An ‘option’ is a legally binding agreement between parties which grants one party (the grantee) the right (but does not oblige them) to acquire an interest from another party (the grantor) on agreed terms, within a certain period of time. For this project, AusNet Services expects to seek an option for easement which will grant AusNet Services a right to acquire an easement over the landholder’s land on agreed terms and for an agreed price within a certain period of time.

Can I refuse to enter an option for easement?

Entering into an option for easement is voluntary. You can refuse to enter into an option for easement. Under the Electricity Industry Act 2000 (Vic) an electricity corporation, such as AusNet Services, may, with the approval of the Governor in Council, compulsorily acquire easements over private land to erect, lay and maintain powerlines. In which case, grounds for compensation are limited.

Be patient, the WVTNP is not a done deal

Rest assured, there is a long way to go before landowners need to be concerned with compensation as the project is not a done deal. Neighbours on the other hand is an entirely different deal.

Speaking to Nicole Chvastek on ABC Victoria's Statewide Drive Program, executive project director Stephanie McGregor said, "We're not at the point where we are making specific offers, but we are encouraging landowners to engage with us."

"Technical surveys would continue as AusNet prepares the EES. There is a genuine risk in that process that it won't be in our favour," Ms McGregor said.

These risks will continue to exist until proportionate investigations are carried out on alternative corridors, alignments, site locations, designs or other options for the planning, construction or operation of the project.

There is no set price per tower, there is no set price per easement, there is no $50 million cap, and there is no need to enter compensation discussions now as the preferred final route has not yet been determined.

There is a genuine chance these discussion may not even be required.

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